Use of cost-effectiveness analysis in health-care resource allocation decision-making: how are cost-effectiveness thresholds expected to emerge?

Value Health. Sep-Oct 2004;7(5):518-28. doi: 10.1111/j.1524-4733.2004.75003.x.


Background: An increasing number of health-care systems, both public and private, such as managed-care organizations, are adopting results from cost-effectiveness (CE) analysis as one of the measures to inform decisions on allocation of health-care resources. It is expected that thresholds for CE ratios may be established for the acceptance of reimbursement or formulary listing.

Objective: This paper provides an overview of the development of and debate on CE thresholds, reviews threshold figures (i.e., cost per unit of health gain) currently proposed for or applied to resource-allocation decisions, and explores how thresholds may emerge.

Discussion: At the time of this review, there is no evidence from the literature that any health-care system has yet implemented explicit CE ratio thresholds. The fact that some government agencies have utilized results from CE analysis in pricing/reimbursement decisions allows for retrospective analysis of the consistency of these decisions. As CE analysis becomes more widely utilized in assisting health-care decision-making, this may cause decision-makers to become increasingly consistent.

Conclusions: When CE analysis is conducted, well-established methodology should be used and transparency should be ensured. CE thresholds are expected to emerge in many countries, driven by the need for transparent and consistent decision-making. Future thresholds will likely be higher in most high-income countries than currently cited rules of thumb.

MeSH terms

  • Cost-Benefit Analysis / economics*
  • Decision Making, Organizational*
  • Efficiency, Organizational
  • Health Care Rationing / economics*
  • Humans